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(a)

Singapore Telecommunications Limited also known as SingTel, is a leading communications


group in Asia, serving more than 550 million customers. It has operations and investments in
more than 20 countries internationally. With more than 130 years of operating experience,
SingTel has helped developed Singapore as a major communication hub within the region. Today,
SingTel provides a wide range of communication services and solutions. This includes fixed,
data, mobile, internet, information communications technology, digital solutions, satellite and pay
television. It holds 3 separate business segments Group Consumer, Group Enterprise and Group
Digital Life.
SingTel is listed on the Singapore Stock Exchange in October 1993 and till date remains the
largest IPO in Singapore based on market capitalization. It is majorly owned by Temasek
Holdings, an investment company owned and managed by the Singapore Government. It is also
listed on the Australian Securities Exchange after acquiring Australias second largest
communications provider, Optus, in September 2001.
SingTels financial data over the last three years is as follows:
2015
Operating Revenue
$17,223m
EBITDA
$5,091m
EBITDA Margin
29.6%
Net Profit
$3,782m
Underlying Net Profit $3,779m
Free Cash Flow
$3,549m
Dividend per Share
$17.5c
Shareholder Payout
$2.8b
Return on Equity
15.6%
Return on Invested 12.1%
Capital

2014
$16,848m
$5,155m
30.6%
$3,652m
$3,610m
$3,249m
$16.8c
$2.7b
15.3%
11.6%

2013
$18,183m
$5,200m
28.6%
$3,508m
$3,611m
$3,759m
$16.8c
$2.7b
14.8%
11.8%

The operating revenue for SingTel shown a slight drop from 2013 to 2014, due to lower mobile
revenue in 2014. It had improved in 2015 by 2%, indicating increased profitability in the year.
The EBITDA shown a reduction of $45million in 2014, and a further reduction of $64million in
2015. Although there is a reduction in the EBITDA, the EBITDA margin is still rather similar for
the past three years. The EBITDA margin of 28-31% is still relatively high, indicating that the
operating expenses does not really eat into SingTels bottom line.
SingTels net profit has been increasing from 2013 to 2015. This is resulted from robust
performance from associates and consumer businesses. The underlying net profit also shown an
increase from 2013 to 2015, which reflects SingTels stability in spite of adverse changes.
The free cash flow for SingTel experienced a drop in 2014. It delivered strong cash flow in 2015
with an increase of 9.2% from 2014. This is resulted from an increase in cash flow from
Singapore, Australia and its associates.
The dividends per share improved by 4% from 16.8cents in 2013 to 17.5cents in 2015. SingTel
has a reputation of giving good shareholder returns. Based on 74% of SingTels underlying net
profit, it had introduced a final ordinary dividend of 10.7cents per share and an interim dividend
of 6.8cents per share, making it up to 17.5cents per share in 2015.

SingTels return on equity shown an increase over the past three years. This is in line with the
increase of SingTels net profits over the past three years. SingTel is hence providing better
returns to its shareholders and its shareholders can expect to earn more for their investments in
SingTel.
The return on invested capital shown a slight drop in 2014 and a further improvement in 2015 to
12.1%. The improvement indicates an improved efficiency for the capital allocation, to its
profitable investments. Generally, SingTel is making better use of its money in generating returns.
Over the last three years, SingTel has proven to be able to deliver strong businesses and resilient
financial performance.

(b)
Revenue and profit indicators
Net profit margin = Net income/ Total revenue
2013
$3,510.6m/$18,183.0m = 19.3%
2014
$3,656.9m/$16,848.1m = 21.7%
2015
$3,784.5m/$17,222.9m = 22.0%
Pre-tax margin = Income before tax/ Total revenue
2013
$4,131.3m/$18,183.0m = 22.7%
2014
$4,347.9m/$16,848.1m = 25.8%
2015
$4,463.0m/$17,222.9m = 25.9%
Net profit margin and pre-tax margin help shareholders to measure how well revenue has been
converted into profits. Based on the calculated net profit margin and pre-tax margin, it shows that
SingTel is making more money that it spends. From 2013 to 2015, there is a slight increase in the
net profit margin and pre-tax, which is a good sign. This indicates that SingTel is able to make
more profit for every dollar of sales.
Shareholder equity and asset indicators
Shareholder equity ratio = Total equity / Total assets
2013
$23,989.2m/$39,983.5m = 60.0%
2014
$23,892.6m/$39,320.0m = 60.8%
2015
$24,767.9m/$42,066.8m = 58.9%
Shareholder equity ratio helps shareholders to determine the amount they would be able to
receive in case of a companys liquidation. A higher shareholder equity ratio would mean that
shareholders are entitled to receive more. In Singtels case, over the past three years, the
shareholder equity ratio falls between 58-60 %. This is a relatively healthy ratio, and shareholders
need not worry about Singtel facing bankruptcy issues.
Financial performance indicators on per share basis
Earnings per share = (Net income Dividends on preferred stock)/ Average outstanding shares
2013
$c22.02
2014
$c22.92
2015
$c23.73
Earnings per share reflect the allocation of a companys profit to an outstanding share of common
stock. This helps to indicate the profitability of a company. According to the past three years
financial data, it shows an increase in the earnings per share over the years. This shows that
Singtel is making increased profits.

Return indicators
Return on capital employed (ROCE) = EBIT/ Capital employed
Capital employed = total assets current liabilities
2013
$4,429.5m/($39,983.5m-$5,791.8m) = 13.0%
2014
$4,529.3m/($39,320.0m-$5,690.0m) = 13.5%
2015
$4,679.4m/($42,066.8m-$5,756.8m) = 12.9%

Return on capital employed (ROCE) is another ratio to measure the profitability of the
company, after factoring in the amount of capital utilised. A higher ROCE would mean that
the company had better utilised its capital. There is a slight increase in the ROCE from 2013
to 2014, and it dropped back to 12.9% in 2015. This shows that there was better utilization of
Singtels capital in 2014, as compared to 2013 and 2015.